MG106 Strategic Management
London School of Economics and Political Science
June 30, 2025
1️⃣ Root causes: What created these problems? How serious?
2️⃣ Pressure sources: SPH system or management behavior?
3️⃣ Memo effectiveness: Does Exhibit 3 clarify sell/non-sell time?
4️⃣ System redesign: How would you fix compensation/policies?
Framework: Resource-Based View + Internal Organizational Environment
Task: 15 minutes to discuss ALL questions 🕐
Think about assets and organizational design
Basic Formula:
Example: $8,000 weekly sales
| Hours | SPH | Pay | Result |
|---|---|---|---|
| 40 | $200 ✅ | $540 | Higher rank 📈 |
| 50 | $160 ✅ | $587 | Lower rank 📉 |
Why would employees choose less pay?
Implicit Pressures 🤐
Explicit Pressures 📢
Result: Employees working 8-10 hours/week unpaid
Is this a system design flaw or implementation problem?
From local dispute to national scandal
Reputation built over 90 years at risk
Key Question: Can you separate system from implementation? 🤔
| Intended 🎯 | Reality 😰 |
|---|---|
| Customer “heroics” | Working off clock |
| Entrepreneurial spirit | Gaming the system |
| Team collaboration | Internal competition |
| Service excellence | “Sharking” sales |
When measurement undermines mission
Memo Promise: Clear categories, fair payment
Reality: Every activity still ambiguous
| Activity | Says | Does |
|---|---|---|
| Delivery | Non-sell ✅ | “Service” |
| Thank-yous | Non-sell ✅ | At home |
| Stock work | Non-sell ✅ | Unpaid |
| Meetings | Non-sell ✅ | SPH hit |
Result: Nothing actually clarified
Current State 😟
Needed Changes ✨
All four elements must align
Continue What Works:
Fix What’s Broken:
Critical: Don’t destroy the entrepreneurial spirit 🎯
Excellence without exploitation?
Tangible Assets 🏢
Intangible Assets 💎
Which are harder to rebuild?
Intangible assets take decades to build, moments to destroy
Key Principle: When one element misaligns, the entire system fails
Nordstrom’s incentives undermined everything else
About Resources 💎
About Systems 🔧
The Bottom Line:
Excellence requires alignment between what you measure,
how you organize, and what you value
Today: Nordstrom faces new challenges in digital retail
Can they transform again without losing their soul? 🤔
Read: The Apple case
Questions to consider:
Focus on: How resources and capabilities create advantage 🎯